Peak Processing (ASX: PKP) has recorded its first positive Group EBITDA quarter, driven by record beverage production and a significant US manufacturing agreement, marking a pivotal turnaround in FY26.
- First positive Group EBITDA quarter with A$710k profit
- 61% quarter-on-quarter production surge to 1.61 million units
- 19 new product listings across multiple Canadian provinces
- Three-year exclusive US manufacturing deal for Fryday Kush®
- Cash position strengthened with A$2.4m convertible loan note conversion
Record Production Drives Positive EBITDA Milestone
Peak Processing Limited (ASX:PKP) has completed the June 2026 quarter with its first-ever positive Group EBITDA, posting A$710,000 on revenue of approximately A$4.4 million. This marks a significant turnaround from the prior quarter’s A$300,000 loss and reflects a 40% increase in revenue quarter-on-quarter, underpinned by a 61% jump in beverage production to 1,610,908 units; the highest quarterly volume in the company’s history.
The company’s FY26 production totalled 4,184,749 units, with the Q4 output more than doubling the average of the first half of the year. This production surge was supported by operational improvements, including automation investments at the Windsor, Ontario facility, and enhanced plant utilisation.
Cash Flow Progress and Operational Efficiency
While positive operating cash flow was not yet achieved, Peak Processing reduced its net cash used in operating activities by 42% to A$1.523 million, aided by record quarterly customer receipts of A$3.327 million. The company attributes the cash flow shortfall primarily to the timing of government and customer collections, which have accelerated since quarter-end.
Operating costs were trimmed, with manufacturing expenses falling to A$2.822 million and staff costs down to A$1.263 million, reflecting the completion of a severance restructure. The company maintained a strong service level with a 97% On-Time-In-Full (OTIF) delivery rate during its busiest production quarter, a critical metric for provincial distributors assessing product listings.
Expanding Product Portfolio and Market Reach
Peak secured 19 new product listings across five Canadian provinces and four product categories, including beverages, concentrates, infused pre-rolls, and edibles. Notably, 12 listings were in Ontario, aligning with the company’s strategy to diversify beyond beverages. Proprietary brand sales surged, with Alberta seeing a 281% increase to about 20,500 cans and Manitoba sales more than doubling.
The company also launched eight new beverage products during the quarter, all formulated using its proprietary Envision Emulsions™ technology, which now powers 34% of all beverage units produced and is adopted across 62% of active SKUs. This deepening adoption underscores the platform’s growing role in Peak’s manufacturing base.
US Expansion Through Exclusive Manufacturing Agreement
Peak’s US subsidiary, Peak USA Inc., entered a binding three-year exclusive manufacturing agreement with BTAB Solutions Inc. to produce Fryday Kush® THC beverages across 13 US states. This deal represents Peak’s first US brand-partner manufacturing contract and leverages its asset-light model and Envision technology through its established Florida production arrangement.
The timing and revenue potential from this agreement will depend on customer orders and distribution arrangements, but it marks a strategic step into the US market, complementing the company’s growing Canadian footprint.
Funding and Capital Structure
During the quarter, Peak completed a A$2.4 million convertible Loan Note raising, which was converted to equity following shareholder approval, strengthening its cash position to A$1.417 million; a 163% increase from the previous quarter. The company also maintains a secured asset-based loan facility of approximately A$1.023 million, currently under discussion for extension.
Related party payments included director fees and executive remuneration, with recent share issues to the Non-Executive Chairman and Managing Director & CEO reflecting ongoing alignment with shareholder interests.
Outlook Focused on Cash Flow and Growth
As Peak enters FY27, management’s priorities include sustaining production and service levels, launching the Canadian listings secured during Q4, scaling Fryday Kush production in line with regulatory and commercial timelines, and expanding Envision Emulsions™ adoption. The company expects operating cash flow to improve quarter-on-quarter as production converts to receipts and legacy arrears diminish.
Peak’s broader product pipeline, US manufacturing agreement, and leaner cost base position it to continue its turnaround trajectory, though execution risks remain around collection timings and market demand.
Bottom Line?
Peak Processing’s first positive EBITDA quarter and US manufacturing deal mark a pivotal turnaround, but improving operating cash flow remains critical to sustaining momentum.
Questions in the middle?
- How quickly will Peak convert its production growth into positive operating cash flow?
- What impact will the Fryday Kush US manufacturing agreement have on revenue and margins in FY27?
- Can Peak maintain high OTIF delivery rates while scaling new product launches and geographic expansion?